Article at a glance:
Can the electricity industry be deregulated and still avoid a California-style energy crisis? The best way to do so, argue the authors of this piece, would be for regulators to link electricity prices in retail and wholesale markets through "dynamic pricing," which lets utilities pass on to the consumer disparities between the price at which they buy energy and the price at which they resell it. Eventually, this approach will help steer electricity demand toward off-peak usage and a more balanced load.
The take-away
The hitch? Dynamic pricing requires huge up-front expenditures to retrofit or replace household meters. Utilities are unlikely to make such an outlay unless regulators give them assurances that they will be able to recoup their investment.